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The frenzied world of real estate By Geof Malone To judge from the local newspapers in Dubai, residents spend all their time buying property. Page after page every day is devoted to the sale of the latest apartment and villa complexes and, according to the hype that accompanies the advertisements, they are all sold within a few hours. And it will be a couple of years, at least, before they are even built. Welcome to the frenzied world of real estate in the City that Cares, the City of Gold, the Commercial Centre of the Gulf, the Sporting Capital of the Middle East, or whichever other of the many epithets the government's promotions people happen to be extolling at any given moment. The buying frenzy started a couple of years ago. Foreigners - who make up about 85 per cent of the United Arab Emirates population of some three million - have, with only a few exceptions, never been able to buy their own property since the UAE was created in 1971. They have been forced to live in rented accommodation owned by UAE nationals, the Emiratis. Naturally the Emirati landlords were a happy lot. In most cases they had been given free land by the Government and generous loans to help build property. And then all these foreigners arrive from all over the world looking for somewhere to live. Ok, you've got the picture. There was a bit of a psychological block about letting the foreigners buy property. Let's face it, the populations in many countries tend to verge on the ballistic when the immigrant populations reach percentages that you can count on one hand. So you can understand the locals feeling a bit under siege. The government wanted to keep them happy. So rules were framed that meant they could still keep a grip on the economy. Needing a local sponsor to do business and making sure you had to rent your home and office were just two of the many measures. For a long time, nobody really queried it. Dubai was a place to work, make money, send it home, and get out. There was no question about putting down roots. Expectations about the future didn't really go beyond the expiry of your three-year residence visa. But gradually a breed has emerged that has made the UAE its home. People from all over the world - from Pakistan, India, the UK and numerous Arab countries - have got used to a pleasant lifestyle and settled down. Many came as young people who subsequently raised families and their children - the 'Gulf brats' as they are frequently referred to - have never really known any other home, apart from vacation visits to wherever. But however long they have been here, they have always had a feeling of impermanence. Apart from anything else, you can find yourself on a plane pretty fast if your employer decides to cancel your visa. But that's a subject for another time; let's stay with property on this occasion because it is property that the Dubai government decided could hold the key to much happiness and prosperity. Now if you should detect a certain cynicism, that has nothing to do with The great admiration one has for the Maktoums, the ruling family in Dubai. In less than four decades they have turned a small trading community into a smart, trendy and world-renowned city. And they have done it without huge oil wealth, although a couple of hundred thousand barrels a day at current prices is pretty useful small change. It's the fact that Dubai's oil is fast running out that has led the Maktoums to embark on a programme of economic diversification, tourism and business being two of the main planks of the policy, and they have made great strides. But apart from the dwindling black gold, Dubai doesn't have much in the way of natural resources except the sand in the desert and because of its salinity that's not much good for anything. But then somebody had a brainwave. Here's all this land doing absolutely nothing. Let's build on it and sell to the foreigners. So two birds with one stone: overnight, desert wasteland became valuable and the foreigners to whom it could be sold, could suddenly feel a bit more as though they had a stake in the country (and would send even less money home). When the sale of the first property was announced a couple of years ago the police had to be called in to control the frenzied crowds. Those who managed to buy something have been handsomely rewarded, with the selling prices of those first apartments tripling. Since then there has been a constant flow of new developments and still they sell, many to speculators, but lots to people who really do see a long-term future here. You can buy anything, from a studio apartment for Dh400,000, through small villas on compounds for around Dh1 million to any figure you care to name. Dubai has led the way in the property market and now some of the smaller emirates, notably Ajman and Ras Al Khaimah, have launched their own schemes. It is likely to happen in the federal capital, Abu Dhabi, any day now. So is property purchase in Dubai a good investment? Most lawyers will tell you you're crazy to even think about it. There are no property laws in place at present and many people are a bit confused about what they are buying - is the property really theirs or just on lease, albeit for 99 years? And are you buying the land or just the property? And aren't the prices a bit artificial anyway? In most places in the world, the market has set the prices over many years while here it is a speculator-fuelled scenario that could just as easily crash. And does anybody know of any properties in the UAE, which have survived the cruel climate for more than 30 years anyway? There are so many unanswered questions but they don't seem to deter the People, who include many Pakistanis, from queuing up with their cheque books. I sincerely hope it all goes right for them. Please Visit our Sponsor (Ads open in separate window)
